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Last October, to the bemusement of many, we featured a tombstone on our cover with the words "R.I.P. PC." So far, it may not be death for the personal computer, but it is surely a very unhealthy state of affairs.

Personal-computer shipments in the first half of this year were down 11%. IDC called the first quarter the worst in all the years it has tracked PC shipments. Gartner, meanwhile, pointed out that the second quarter made it five quarters in a row of year-over-year declines, the longest period of decline on record.

At 76 million units shipped last quarter, we're back to the level of PC shipments last seen in early 2008, heading into recession.

Conventional wisdom has it that PCs will bounce back this latter half of the year. After all,
IntelINTC 0.13836042891732964%Intel Corp.U.S.: NasdaqUSD28.95
0.040.13836042891732964%
/Date(1438376400109-0500)/
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:
26641760AFTER HOURSUSD28.91
-0.04-0.1381692573402418%
Volume (Delayed 15m)
:
517003
P/E Ratio
12.266949152542374Market Cap
137657253627.777
Dividend Yield
3.316062176165803% Rev. per Employee
517816More quote details and news »INTCinYour ValueYour ChangeShort position
(ticker: INTC) just rolled out new microprocessors, dubbed Haswell, to wide acclaim, and the power efficiency of those chips is supposed to finally kick-start the category of "ultrabook" laptops the company is promoting that are sleeker and will have superior battery life. And
MicrosoftMSFT -0.3839590443686007%Microsoft Corp.U.S.: NasdaqUSD46.7
-0.18-0.3839590443686007%
/Date(1438376400181-0500)/
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:
30245315AFTER HOURSUSD46.77
0.070.14989293361884368%
Volume (Delayed 15m)
:
956165
P/E Ratio
31.986301369863014Market Cap
374860906124.115
Dividend Yield
2.6552462526766596% Rev. per Employee
731094More quote details and news »MSFTinYour ValueYour ChangeShort position
(MSFT) is expected to offer a major update to Windows 8 that will remedy both consumer and corporate complaints about the software.

All well and good, but I don't see it changing the dismal outlook for desktops and laptops much. The market is undergoing both structural and cultural changes that weigh against a broad recovery.

On the structural side, economic factors are restricting a corporate PC refresh. And with 7.6% unemployment, there is not enough hiring going on to bring the workforce to a level requiring much retooling of desktops.

J.P. Morgan chief Jamie Dimon on Friday said on CNBC that lending will come back over the next one to two years as the economy rebounds. But until those funds flow through to small businesses, capital purchases of PCs will be constrained.

YOU KNOW YOU'RE NOT seeing the revitalization of an industry when an upstart brand like China's
Lenovo
(992.Hong Kong) takes the market lead, with a 16.7% share in the latest quarter, up from 14.9% a year ago, according to Gartner. This, even though its shipments actually declined. A rising tide may lift all boats, but this is merely shifting the deck chairs. Lenovo's products are very good, but the share gains likely represent the few buyers who even care chasing what little differentiation they can find in a fully commoditized product. (For a different view of Lenovo, see Follow Up, "Lenovo's Master Plan is Working.")

THE FINAL, PERHAPS MOST important structural reason that there's no rebound, is that the industry is still up against numbers that include the surge in Netbook laptops—all the rage a few years back—which sold for a pittance but weren't very good computers.

The most conspicuous decliners and share losers the last few quarters have been the two former stars of the Netbook craze,
Acer
(2353.Taiwan) and
Asustek Computer2357.TW -6.930693069306931%ASUSTeK Computer Inc. GDRU.S.: OTCUSD47
-3.5-6.930693069306931%
/Date(1437690000000-0500)/
Volume (Delayed 15m)
:
144
P/E Ratio
11.389797649339634Market Cap
6704992303.71023
Dividend Yield
5.784457446808511% Rev. per Employee
2577470More quote details and news »2357.TWinYour ValueYour ChangeShort position
(2357.Taiwan). Acer began to experience double-digit shipment drops in the third quarter of last year. Asus joined the pain last quarter with a 20% decline. People will say Acer's and Asus's troubles make the numbers look worse than they are.

But when the manufacturers that previously delivered large double-digit gains now suddenly slide, what was working in the industry is falling apart.

The latest form of the Netbook is the Chromebook, which runs
Google's
(GOOG) Chrome operating system. Made by Samsung Electronics (5930.Korea) and Google itself, Chromebooks sell for as little as $199.

The Chromebook has got a lot of buzz, and I've heard industry executives marvel at how it's taken off like a weed. But a report on CNBC on Friday noted there are no clear data on unit shipments. The best indicator at the moment appears to be that less than 1% of Web browsing is done using a Chromebook.

So the hottest thing in PC-like devices may not be hot at all.

THAT BRINGS US TO THE CULTURAL shift. It's not just that tablet computers are creeping up on PCs in volume terms, though they are. RBC Capital's Amit Daryanani estimates that 196 million tablet computers could be sold this year, about two-thirds as many as PCs. That would be 63% shipment growth.

The more telling thing, believe it or not, is that Wall Street has been trimming estimates for smartphones. Both Samsung and
AppleAAPL -0.8743973196044782%Apple Inc.U.S.: NasdaqUSD121.3
-1.07-0.8743973196044782%
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:
41225145AFTER HOURSUSD121.45
0.150.1236603462489695%
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P/E Ratio
14.006928406466512Market Cap
691740216377.936
Dividend Yield
1.7147568013190437% Rev. per Employee
2409500More quote details and news »AAPLinYour ValueYour ChangeShort position
(AAPL) have been under pressure over worries that the most expensive smartphones, which they dominate, are not living up to expectations.

Why? Part of it is simply saturation among those buyers with wallets fat enough for such wares.

The more important reason is that what's important to people now is less the hardware and more the kinds of content and applications that can be used on these gizmos. We all want to watch TV on multiple screens, and we are all finding more ways to carry out our work—and play—on smartphones and tablets.

And that's the real problem for the PC. It can run any software you want, sure, but it doesn't lend itself to the kind of frictionless consumption of content—books, movies, music, and apps—that Apple's App Store and Google's Google Play shop offer. People want the ecosystem, and they're moving to non-PC devices in droves to frolic in that ecosystem.

THE IRONY TO ALL THIS, of course, is that plain-old PC names have been great stocks this year. Intel shares are up 15%, below the Nasdaq's 19% climb, but much of that is just in the last quarter or so. Microsoft is up 34%.

Based on the weak PC market, it's clear that what's changed most for investors this year is sentiment, not fundamentals.

I believe these stocks can continue to work through the summer. Intel and Microsoft sport terrific dividend yields, and investors are willing to give them a pass on PCs. Meanwhile, Dell and HP could continue to be story stocks for some time.

The prognosis, then, is lousy for the PC, but not so bad for PC stocks.